Rs5,000 Note Going to Demonetize from July 2021

Former head of the Federal Board of Revenue and respected accountant Syed Shabbar Zaidi has suggested that the government should go for demonetization of the Rs5,000 note from July 2021.

“5000 Rupee Notes. Demonetise from July 1, 2021. Announce two months earlier” said Zaidi in a tweet on Friday.

The former FBR chief said that the government should announce the plan in advance for a smooth “transition” period.

Zaidi believes that the opponents of demonetization have “no idea about abuse” and alleged that vested interests prevent a consideration of its benefits.

The former tax czar believes that the move will improve the economy and ensure that banking prospers.

He also said that by demonetising the denomination, bribery will become difficult. 

He also suggested that those hoarding gold in lockers should have to inform the government if bullion is being held and the government should also monitor bullion trading.

What is demonetisation?

According to website Investopedia, demonetisation is the act of stripping a currency unit of its status as legal tender.

“It occurs whenever there is a change of national currency: The current form or forms of money is pulled from circulation and retired, often to be replaced with new notes or coins. Sometimes, a country completely replaces the old currency with new currency,” explains the website.

In this case, it simply means that the Rs5,000 note should cease to exist and hold value. 

However, the move is seen as a drastic intervention as it directly affects the “medium of exchange used in all economic transactions”.

But economists believe that the move can help stabilise a country’s existing problems but also warn that if the move is taken suddenly of drastically then it can also lead to chaos.

The most recent country to carry our demonetization was India. Demonetization there was done by the Narendra Modi led government in 2016.

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